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Wednesday, May 28, 2008

Las Vegas Market Report: A 'Food Desert' Neighborhood to Get A New Grocery Store; But it's Not A Fresh & Easy Neighborhood Market

Regular Fresh & Easy Buzz Las Vegas, Nevada correspondent Michael Vegas tips us to a report on local television Channel 8 about a low-income neighborhood in the city located west of downtown which has been trying to lure a grocery store to it for years.

The majority African American-populated neighborhood doesn't have a grocery store in it that offers a decent selection of basic groceries and fresh foods like produce and meats at affordable prices. In other words, it qualifies as an urban, inner city "food desert," or a neighborhood underserved by grocery stores.

The neighborhood has been completely without a grocery store since a Safeway Stores, Inc.-owned Vons supermarket closed in 2004.

Now, Channel 8 reports the Las Vegas City Council has lured a new grocery store to the neighborhood. But, it isn't a Tesco Fresh & Easy Neighborhood Market store--despite the retailer's statements that one of its key strategies with the small-format, combination basic grocery and fresh foods chain is to locate stores in regions it does business in "food desert" neighborhoods.

Rather, a California-based grocer named "Buy Low Market" will be opening a store in the low-income Las Vegas neighborhood west of downtown, according to the Channel 8 report.

Safeway Stores, Inc. owns the building (pictured at left) and will be subleasing it to the company that operates Buy Low Market.

K. V. Mart operates 22 stores, and is considered one of the most successful multi-store independents, in Southern California.

The minority-owned food and grocery retailer has operated stores in Southern California for about 30 years, using an everyday low-price, value model. K. V. Mart also is considered a top ethnic foods retailer--especially Hispanic-oriented--and has won numerous industry awards for its ethnic foods merchandising and promotional programs.

The retailer currently operates three stores, all in Southern California, under the Buy Low Market banner. The Las Vegas store will be its first unit outside of the region. [Click here to view the current weekly grocery advertising circular for K.V Mart's Buy Low Markets chain, as well as for its other banners.]

However, not all is paradise in this Sin City neighborhood. According to the Channel 8 report, a number of neighborhood residents are skeptical about the Buy Low Market, which will sublease the vacant Vons supermarket space, because they weren't given a say in the matter and aren't sure the grocery store "is any good."

"It feels as though this is shoved down our throats, like this is what it's going to be and that's all there is to it. They say they are supposed to work for the community, well the community didn't have the say so in this. It just popped up," said Mancy Howard, a neighborhood resident, in the Channel 8 report.

It is a grocery store soon to be where only an empty building currently stands however.

The Las Vegas City Council played a role in bringing the grocer to the neighborhood west of downtown. In fact, the food retailer will receive $200,000 from the city as part of package designed to get the grocer to locate a store in the neighborhood.

There's also good economic news for the neighborhood. According to the Channel 8 report, the Las Vegas City Council and the grocer say the store will employ about 150 people, with a preference for all hires being given for neighborhood residents.

Michael Vegas (who asked his last name not be published) tells Fresh & Easy Buzz the issue of bringing a grocery store to the neighborhood has been an ongoing one since the Vons supermarket closed four years ago in 2004. It's been a much-publicized issue in Las Vegas as well over the last four years.

He tells us the city council has been promising to lure a full-service grocery store to the low-income neighborhood over these last four years, without any success until now.

About the Buy Low Market grocery store coming to the Las Vegas "food desert" neighborhood, Councilman Ricky Barlow, who was a key player in getting this deal through, says area residents now have convenience just a couple of blocks away rather than several miles.

For the last four years, residents have been pushing to get a major grocery chain opened on some city land in this area. There were talks about a Food 4 Less opening up, but that deal fell through. For now, residents say they can only hope the new grocery store is everything they wanted, according to the Channel 8 report.

It seems to Fresh & Easy Buzz, locating a store in the underserved, "food desert" Las Vegas neighborhood would have offered a good opportunity for Tesco's Fresh & Easy Neighborhood Market, since the Las Vegas Metropolitan region is one of its current three target markets (besides Southern California and Arizona), along with the fact the grocery chain says locating stores in "food desert" neighborhoods is one of its key strategies.

Tesco currently operates about a dozen of its small-format, convenience-oriented Fresh & Easy grocery stores in the Las Vegas Metro region, and is in the process of converting 10 former Rite Aid drug store buildings into additional Fresh & Easy grocery markets in the region. All of these stores are located in middle income neighborhoods however.

Councilman Ricky Barlow, along with other members of the Las Vegas City Council, say Tesco's Fresh & Easy Neighborhood Market wasn't interested in locating a store in the neighborhood. We wonder why?

Not only would it have made good economic sense for Tesco to do so, after all there's isn't a grocery store in the entire neighborhood, it would offer the grocer an opportunity to make good on its pledge--as well as strategy--of opening Fresh & Easy grocery stores in neighborhoods underserved by food stores offering a selection of basic groceries and fresh foods at reasonable prices.

Since Fresh & Easy wants to become a major food and grocery retailing player in the Las Vegas region--and soon will have over 20 stores in the market--it seems logical to us that locating a store in this "food desert" neighborhood west of downtown would have been a natural for Tesco's Fresh & Easy Neighborhood Market USA. But it appears not to be the case.

Since the city of Las Vegas is giving Buy Low Market (K.V. Mart) $200,000 as an economic incentive to locate a grocery store in the neighborhood, this money would also have been available to Tesco's Fresh & Easy. We're also told the city is offering Buy Low Market additional economic incentives for hiring residents from the neighborhood and giving them training.

Of its current 61 stores open, Tesco's Fresh & Easy has located two in areas that can be defined as "food Deserts"--one in Compton in Southern California and the other in Los Angeles.

The retailer is set to open three stores in neighborhoods currently underserved by grocery stores in Northern California next year--one in Oakland, another in San Francisco's Bayview-Hunter's Point, and the third in Sacramento's Oak Park neighborhood.

However, since the grocery chain already has a solid--and growing--presence in the Las Vegas Metropolitan food and grocery market, we wonder why it didn't take the opportunity to locate a grocery store in the west of downtown "food desert" neighborhood?

It's a moot point now however--but still an interesting question. Channel 8 reports the new Buy Low Market in the renovated Vons supermarket will open towards the end of this year.

Fresh & Easy Buzz is familiar with K.V. Mart's supermarkets and warehouse stores, including those under the Buy Low Market banner. The supermarkets aren't fancy or upscale. However, they offer a solid selection of national brand and private label food and grocery items at good prices. The stores also have strong selections of bulk fresh produce and fresh meats offered at value prices.

The retailer is an ethnic niche marketer as well, so look for it to offer an expanded selection of foods appealing to the minority consumers in the Las Vegas neighborhood as well, if the grocers' current merchandising practices in Southern California are any indication of how it will merchandise the west of downtown store in Las Vegas.

K.V. Mart is a major customer of Unified Grocers, the largest wholesale grocery distributor in the Western U.S. All of its banner stores sell Unified's private label grocery products. Unified also has one of the largest ethnic foods product selections of all grocery wholesalers nationally, which K.V. Mart takes advantage of liberally in its stores.

We expect K. V. Mart, which is a cautious but aggressive multi-store independent operator, to look at opening addition stores in the Las Vegas region--not just under its Buy Low Market banner but also under one of its warehouse store banners--now that's it's entering the market with its first store.

Meanwhile, although there seems to be some anger on the part of some of the neighborhood's residents over the Las Vegas City Council's decision to lure the grocer to the neighborhood, the good news is neighborhood residents will be getting a supermarket operated by an experienced food retailer, which offers a wide-selection of groceries and fresh foods with a emphasis on everyday low-prices and value.

2 comments:

Anonymous
said...

KV Mart is an agressive grocer in Southern California. They regularly kick Ralph's and Vons butts on prices, including produce. The stores are fairly bare bones but the pricing is low and quality pretty high. Are also strong in the Hispanic category, both with selection and pricing.

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